This problem continues the Davis Consulting, Inc. situation from Problem. Davis Consulting uses a job order costing system in which each client is a different job. Davis assigns direct labor, daily per diem, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2016, the controller prepared the following budget:

In November 2016, Davis served several clients. Records for two clients appear here:

Requirements
1. Compute Davis’s predetermined overhead allocation rate for 2015.
2. Compute the total cost of each job.
3. If Davis wants to earn profits equal to 25% of sales revenue, what fee should it charge each of these two clients?
4. Why does Davis assign costs tojobs?

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Direct labor hours (professionals) Direct labor costs (professionals) Support staff salaries Computer leases Office supplies Office rent 5,500 hours 990,000 105,000 48,000 15,000 30,000 Tommy's Trains Marda's Cookies 730 hours 2,600 11,000 300 hours Direct labor hours Meal per diem Travel costs $ 600